In the latest filing by Lodsys [PDF] in response to the Apple motion to intervene in the Lodsys v. Combay case, Lodsys gives every indication it is in a panic to keep Apple from intervening. Much of the document is redacted, but despite that fact we can glean the sense that Apple's entry into the lawsuit spoils Lodsys's entire theory of the litigation, at least with respect to the Apple (and likely Google) developers.

Apple is licensed to the asserted patents, has embodied the technology covered by those patents in Apple's products and services it provides to the defendant developers, and the protection of that license extends to those developers.

Apple satisfies the requirements for intervention as of right under Fed R. Civ. P Rule 24(a). Apple has an interest in the property that is the subject of this action, namely, the patents in suit. Apple has a license to those very same patents. The value of this license to Apple here lies in Apple’s ability, pursuant to the express terms of the license, to offer products and services embodying the patents in suit to the Developers, in return for the Developers’ agreement to pay Apple a percentage of their sales made using Apple’s products and services.

[E]ven if Apple could not intervene as of right, the motion should still be granted for the separate reason that Apple satisfies the requirements for permissive intervention under Fed. R. Civ. P. Rule 24(b). It is black-letter law that permissive intervention is appropriate to protect the interests of a non-party whose technology has been accused of patent infringement.

Apple supports each of the last two contentions above with extensive legal citations.

In essence, Apple is arguing that the Lodsys patented technologies are embedded in the Apple offerings and merely utilized for their intended purpose by developers in building their applications, not independently infringed by the developer applications themselves. Importantly, Lodsys has publicly acknowledged that Apple is, in fact, licensed to the patents. Moreover, the claim charts that Lodsys sent to defendants specifically identify Apple technology as the basis for the infringement, not the developers' separate technology.

In its initial response Lodsys tries sleight of hand, focusing on the trivial and non-responsive while ignoring the bigger picture presented by Apple. For example, ignoring Apple's contentions under the license, Lodsys tries to contend that it is not the license that is important but the fact that Apple's interest is purely economic (because Apple will lose revenue). While the impact on Apple will certainly have an economic element, Lodsys disregards Apple's property interest in the patents in the form of the license.

Lodsys then attacks Apple's position on the grounds that Apple lacks standing, i.e., Apple lacks a sufficiently substantial interest in the patents to bring a counterclaim. But Lodsys is confused on the law. Were Apple trying to assert its non-exclusive license against a third-party, Lodsys would be correct. But Apple is asserting its rights under the license against the patent holder, the party ultimately responsible for having granted those rights. Apple does not require an exclusive license to do so. The mere existence of a non-exclusive license in that context is sufficient for standing to bring the counterclaim.

Lodsys next argues that it should be granted the right to conduct discovery on the Apple license in order to establish that the license doesn't grant whatever rights Apple claims. This is an interesting argument from the standpoint that Lodsys goes on and on about Apple's (legitimate) right to maintain the terms of the license agreement as confidential. How is it that the present patent holder (Lodsys) in acquiring the rights to the patents did not acquire from its predecessor in interest in the patents (Webvention) a copy of all licenses that encumber those patents? Maybe Lodsys should be crying to Webvention instead of to the court.

Finally, Lodsys argues that Apple is under no obligation to indemnify the app developers and, for that reason, should not be permitted to intervene. For that proposition Lodsys fails to cite a single relevant case.

This failure by Lodsys to properly address any of the key Apple assertions is what Apple focuses on in its reply to Lodsys's response. For example, Apple points out that Lodsys never addresses the issue of where the infringement lies - in the Apple technology as Apple contends or in the developer technology.

Apple points out that Lodsys's arguments for discovery on the license prior to an order permitting Apple's intervention is not the law; such discovery may only occur after the grant of intervention. Apple further notes that Lodsys's arguments that Apple's motion is premature are also not supported by the law (and, of course, if Apple were to wait to intervene, Lodsys would argue that they are too late).

By the time we get to the Lodsys sur-reply, it comes across as legal gibberish. For example, Apple shouldn't be allowed to protect its property interest in the license and intervene because one of the current defendants is certain to challenge the validity of the patents. Say what?!!!

Lodsys then appears to argue that it is not a licensor under the license to Apple and therefore has no privity of contract with Apple justifying Apple's intervention. Again, that position flies in the face of the law. Lodsys took the patents subject to Apple's license and, for that reason, is bound by the license regardless of whether Lodsys's name actually appears on the face of the license.

I don't usually like to predict outcomes on motions, but I will go out on a limb here and predict that Apple is granted the right to intervene if for no other reason than Lodsys appears to be clueless with respect to the law.

06/21/2011 - 12 - ORDER granting 5 Motion to Seal Document Exhibit A to the Declaration of Jonathan C. Sanders in Support of Apple's Motion to Intervene shall be maintained under seal. Signed by Judge T. John Ward on 6/21/2011. (ch, ) (Entered: 06/21/2011)

06/27/2011 - 15 - ORDER granting 14 Motion for Extension of Time to File Response/Reply re 4 MOTION to Intervene Responses due by 7/27/2011. Signed by Judge T. John Ward on 6/27/2011. (ch, ) (Entered: 06/27/2011)

07/18/2011 Defendant's Unopposed First Application for Extension of Time to Answer Complaint is GRANTED pursuant to Local Rule CV-12 for Michael G. Karr d/b/a Shovelmate to 8/20/2011. 30 Days Granted for Deadline Extension.( sm, ) (Entered: 07/18/2011)

08/23/2011 - 43 - ORDER granting 41 Motion for Extension of Time to Answer. Michael G. Karr d/b/a Shovelmate be given to and including September 21, 2011 to answer. Signed by Judge T. John Ward on 8/23/11. (ehs, ) (Entered: 08/23/2011)

08/23/2011 - 45 - ORDER granting 38 Motion for Extension of Time to Answer. Quickoffice, Inc. has until August 29, 2011 in which to answer. Signed by Judge T. John Ward on 8/23/11. (ehs, ) (Entered: 08/23/2011) 08/23/2011 Answer Due Deadline Updated for Quickoffice, Inc. to 8/29/2011. (ehs, ) (Entered: 08/23/2011)

Apple Inc. (“Apple”) hereby respectfully moves to intervene as a defendant and
counterclaim plaintiff in the above-captioned action brought by plaintiff Lodsys, LLC
(“Lodsys”) against seven software application developers (collectively, “Developers”), for
allegedly infringing U.S. Patent Nos. 7,222,078 (the “’078 patent”) and 7,620,565 (the “’565
patent” and, collectively, the “patents in suit”). Apple seeks to intervene because it is expressly
licensed to provide to the Developers products and services that embody the patents in suit, free
from claims of infringement of those patents.

INTRODUCTION

In its Complaint, Lodsys alleges that the Developers infringe the patents in suit.
Lodsys’s claims are based on the Developers’ use of products and services provided to the
Developers by Apple, for which the Developers pay Apple a percentage of their sales. Apple has
an interest in property that is at the center of this dispute, namely, its license to the patents in suit
and its business with the Developers, which depends on their use of products and services that
Apple is expressly licensed under the patents in suit to offer them. Both Lodsys’s Complaint and
its threats to other Apple developers adversely affect the value of Apple’s license and its
business with the Developers.

Apple should be permitted to intervene here, for at least two separate and
independent reasons. First, Apple satisfies the requirements for intervention as of right under
Fed R. Civ. P Rule 24(a). Apple has an interest in the property that is the subject of this action,
namely, the patents in suit. Apple has a license to those very same patents. The value of this
license to Apple here lies in Apple’s ability, pursuant to the express terms of the license, to offer
products and services embodying the patents in suit to the Developers, in return for the
Developers’ agreement to pay Apple a percentage of their sales made using Apple’s products and
services. The Developers, in turn, are able to use the products and services Apple provides to

them free from claims of infringement of the patents in suit under the doctrines of exhaustion and
first sale. Apple has a direct and substantial interest in preserving the value of its license, as well
as in protecting the value of its technology, services, and relationships with the Developers.
Those interests will be prejudiced absent intervention here. A determination that the Developers
are not permitted to use Apple’s licensed products and services will significantly diminish the
value of Apple’s license rights, impair its relationships with the Developers, and lead to loss of
significant revenue from all developers. In fact, the mere allegation of the same significantly
threatens to diminish Apple’s rights and those relationships. Moreover, Apple’s rights will not
be adequately protected by the current defendants in this case, because Lodsys has chosen to
assert these claims against Developers who are individuals or small entities with far fewer
resources than Apple and who lack the technical information, ability, and incentive to adequately
protect Apple’s rights under its license agreement.

Second, even if Apple could not intervene as of right, the motion should still be
granted for the separate reason that Apple satisfies the requirements for permissive intervention
under Fed. R. Civ. P. Rule 24(b). It is black-letter law that permissive intervention is appropriate
to protect the interests of a non-party whose technology has been accused of patent infringement.
Apple’s proposed defense and counterclaim are based on the doctrines of exhaustion and first
sale deriving from Apple’s license to the patents in suit. Apple’s defense and claim present
numerous issues of law and fact that will be common to the main action, regardless of whether
Apple is permitted to intervene. Finally, intervention will not delay these proceedings or
prejudice any current party. The Court should grant this motion and allow Apple to file the
proposed Answer and Counterclaim submitted herewith.1

___________________

1 Apple’s proposed Answer and Counterclaim is attached as Exhibit A hereto.

2

FACTS AND PROCEDURAL BACKGROUND

I. The Licensed Technology

Apple designs and offers a comprehensive ecosystem of technologies and services
that enable the delivery of software applications (or “Apps”) such as games, tools, and
educational services on Apple devices such as the Mac, iPhone, iPad, and iPod Touch. See, e.g.,
Answer-in-Intervention (“Answer”) ¶ 1. In order to access Apple hardware and software, the
Developers use Apple application program interfaces (“APIs”), Apple software development kits
(“SDKs”), and Apple’s operating system (“iOS”). Id. ¶ 5. Together, these Apple products and
services permit the Developers to interact with Apple end users through the App Store, where
Developer Apps can be purchased or upgraded. Id. Apple also provides a comprehensive set of
Apple hosting, marketing, sales, agency and delivery services that allow Developers to provide
Apps to millions of Apple end users. See generally id.2 In return for Apple’s provision of these
products and services to the Developers, the Developers agree to pay Apple a percentage of their
sales made using Apple’s products and services. See, e.g., id. ¶ 6. Apple’s innovative products
and services have enjoyed great success: fourteen billion Apps have been downloaded from the
App store, and the App Store’s offerings grow daily, with 425,000 Apps available from tens of
thousands of unique app developers. Id.

To protect its enormous investment in its App Store and related hardware,
software, and APIs, Apple periodically enters into licenses for patents that allegedly cover Apple
technology, including one such license agreement (the “License”) that covers the patents-in-suit.
See generally Declaration of Jonathan C. Sanders (“Sanders Decl.”) ¶ 2, Ex. A. The License

____________________

2
The “App Store” is a virtual store from which users may buy and upgrade applications
such as games and tools. The developers, not Apple, set the prices at which their Apps
are sold. Apple acts as an agent of the Developers in effectuating the sale of the Apps to
Apple end users.

3

provides Apple with, among other things, the right to offer products and services that embody
the Lodsys patents. See generally id. Lodsys has acknowledged that Apple is licensed to these
patents. http://www.lodsys.com/blog.html (“Apple is licensed . . . .”) (emphasis in original).

II. Lodsys’s Infringement Claims

Although Lodsys’s Complaint lacks any detailed allegations as to what aspects of
the accused Apps infringe the patents in suit, notice letters Lodsys sent to each of the Developers
establish clearly that Lodsys’s claims target Apple technology. Specifically, the infringement
analysis in the notice letters focuses on the Developers’ use of Apple products and services
covered by the License.

For example, Lodsys appended to its notice letters representative claim charts
purporting to show how Claim 1 of the ’078 patent (asserted here) reads on the accused products.
Sanders Decl. ¶ 3, Ex. B (Illusion Labs) at 4-9. Claim 1 of the ’078 patent claims, among other
things, (1) “[a] user interface, which is part of each of the units of the commodity, configured to
provide a medium for two-way local interaction between one of the users and the corresponding
units of the commodity, and further configured to elicit, from a user, information about the user’s
perception of the commodity”; (2) “[a] memory within each of the units of the commodity
capable of storing results of the two-way local interaction from each of the units of the
commodity to a central location” and “[a] communication element associated with each of the
units of the commodity capable of carrying results of the two-way local interaction from each of
the units of the commodity to a central location”; and (3) “[a] component capable of managing
the interactions of the users in different locations and collecting the results of the interaction at
the central location.” Docket No. 1, Ex. B at Claim 1. Each of these elements requires, under
Lodsys’s apparent theories, the use of licensed Apple APIs, software, and/or hardware.

4

For example, the screenshot Lodsys used purportedly to establish the first claim
element above with respect to Illusion Labs shows an interface with an “App Store” button that
uses an Apple API and other Apple technology to allow interaction between the App, the user,
and the App Store:

Sanders Decl. ¶ 3, Ex. B at 7. Similarly, Lodsys relied on screenshots depicting the use of
Apple’s APIs and memory and the App Store purportedly to meet the second claim element,
storing user feedback to the App Store itself:

Id. at 8. Finally, Lodsys likewise pointed to a screenshot of the App Store itself to allegedly
meet the final claim element, collecting and storing the user results in that central location:

5

Id. at 9. Thus, in each case, even under Lodsys’s own infringement theories, Lodsys’s
allegations rest substantially or entirely on Apple products and services licensed under Apple’s
License, not on algorithms or content provided by the Developers themselves.

Moreover, even a cursory review of the diverse Apps accused of infringing the
patents in suit reveals that their only similarity is their use of Apple products and services. The
accused products range from business software that permits the user to work on Microsoft Office
documents (Quickoffice), to a fantasy game (Shadow Era), to a game in which the user guides a
silver ball through a labyrinth (Labyrinth), to a game requiring the user to strategically eliminate
hearts that shoot daggers (Hearts and Daggers), to a program that facilitates the composition of
“Tweets” for Twitter (Twitterrific), to a poker game (Mega Poker). See generally Docket No. 1
(Complaint). The only thing these Apps have in common is their use of the Apple technology
that permits the Developers to interact with Apple end users through the App Store and other
Apple technology. In other words, what is at issue in this case is not the substantive code in
these varied programs, but rather each individual App’s use of Apple products and services, all
of which are licensed.

III. Early Stage of the Proceedings and Apple’s Proposed Answer and Counterclaim

On June 1, 2011, this case was assigned to Judge T. John Ward. Sanders Decl. ¶
4. An initial case management conference has not yet been scheduled, no defendant has
responded to the Complaint, no discovery has been conducted, and, indeed, nothing of

6

significance has happened in the lawsuit beyond Lodsys’s simple filing of the Complaint.
Sanders Decl. ¶ 5. Because Lodsys’s infringement allegations are based on Apple products and
services that are indisputably licensed, Apple moves to intervene in this lawsuit to protect its
interest in its License by asserting a defense and counterclaim that Lodsys’s claims against the
Developers are barred under the doctrines of exhaustion and first sale.

ARGUMENT

I. Legal Standard

Rule 24(a) of the Federal Rules of Civil Procedure governs intervention as a
matter of right, while Rule 24(b) governs permissive intervention. Fed. R. Civ. P. 24. Pursuant
to Rule 24(a), a movant may intervene as a matter of right whenever four requirements are met:
(1) the motion is timely; (2) the movant has an interest relating to the property or transaction that
is the subject of the action; (3) the movant is situated such that the disposition of the action may,
as a practical matter, impair or impede its ability to protect its interest; and (4) the movant’s
interests are inadequately represented by the existing parties to the suit. Fed. R. Civ. P. 24(a)(2);
Reid v. GM Corp., 240 F.R.D. 257, 259 (E.D. Tex. 2006). Although all four requirements must
be met, the inquiry is a “flexible one” that “focuses on the particular facts and circumstances
surrounding each application.” Edwards v. City of Houston, 78 F.3d 983, 999 (5th Cir. 1996);
see, e.g., Sierra Club v. Espy, 18 F.3d 1202, 1205 (5th Cir. 1994) (encouraging courts to allow
intervention “where no one would be hurt and the greater justice could be attained”) (citations
omitted).

Even where intervention as of right is not available, Rule 24(b) provides
separately and independently for permissive intervention whenever an applicant “has a claim or
defense that shares with the main action a common question of law or fact.” Fed. R. Civ. P.
24(b)(1)(B); see, e.g., Stallworth v. Monsanto Co., 558 F.2d 257, 269 (5th Cir. 1977) (explaining

7

permissive intervention). Where the applicant’s claim or defense is timely, shares a question of
law or fact with the main action, and will not prejudice any party, courts freely grant permissive
intervention. Id. (noting “liberal construction” of Rule 24(b)).

II. Apple is Entitled to Intervene As a Matter of Right Under Rule 24(a)(2)
The first reason this motion should be granted is that Apple is entitled to intervene
as of right. As set out further below, Apple’s motion is timely, Apple has a significant interest in
its License and in the licensed products and services that are the subject of this action, Apple’s
interests in that property may be substantially diminished if it is not permitted to intervene, and
the current defendants may not effectively represent Apple’s interests in this case.

Negotiated Data Solutions, LLC v. Dell, Inc., No. 2:06-cv-528
(E.D. Tex. 2008), Intel filed a motion to intervene based on its license to the patents in suit.3
The
patents in suit had been assigned to plaintiff NDS, which had later filed an infringement action
against Intel customer Dell based on Intel components incorporated into Dell systems. Id. Intel

sought to intervene and assert claims for a declaratory judgment that, among other things, the
plaintiff’s allegations were barred by the doctrine of patent exhaustion, id. at *6-*9, arguing that,
without declaratory relief, the plaintiff would “continue to wrongfully assert the Patents-in-Suit
against Dell and threaten Intel and its customers, thereby causing Intel irreparable injury and
damage.” Id. at *5-*7. The court found that Intel was entitled to intervene as a matter of right
on “the issues of patent exhaustion and licensing.” Order, Negotiated Data Solutions, LLC v.
Dell, Inc., No. 2:06-cv-528, at *1 (E.D. Tex. Oct. 23, 2008) (Everingham, J.) (attached as Ex. D
to the Sanders Decl.). As in Dell, Apple can easily satisfy each of the four requirements for
intervention as of right here.

A. Apple’s Motion to Intervene is Timely

A motion to intervene is timely where the intervenor promptly moves upon
learning of its interest in the litigation, where the current parties would not suffer prejudice from
allowing the intervention, and where no other special or unusual circumstances render the motion
untimely. See, e.g., Edwards, 78 F.3d at 1000; Heaton v. Monogram Credit Card Bank, 297
F.3d 416, 422-23 (5th Cir. 2002). Here, all requirements are readily satisfied. Indeed, Apple
moved while the case was still in its infancy: the lawsuit was filed just over a week ago, the
defendants have not yet answered Lodsys’s Complaint (indeed, upon information and belief, they
have not yet even been served with the summons and Complaint), and no other significant
developments have taken place. Apple’s motion is indisputably timely. See, e.g., Edwards, 78
F.3d at 1000-01 (noting that the Fifth Circuit has found motions filed several months into the
litigation timely as long as case is still in its early stages); The Aransas Project v. Shaw, 2010
WL 2522415, at *3 (S.D. Tex. June 17, 2010) (same); see also Sierra Club v. Glickman, 82 F.3d
106, 109 n.1 (5th Cir. 1996) (“The timeliness requirement only bars intervention applications
made too late.”).

9

Similarly, Apple’s motion will not result in prejudice to any existing party to this
action. Apple’s proposed Answer in Intervention asserts a single defense and declaratory
counterclaim, both based on the patent law doctrines of exhaustion and first sale. Based on
Lodsys’s infringement allegations, these very same issues will likely be raised by every
defendant. Therefore, allowing Apple to intervene will not cause any delay in the schedule, add
any new issues to the case, or otherwise affect the rights of the parties in any respect. Finally,
there are no special or unusual factors present that would render Apple’s motion untimely or
improper. See Edwards, 78 F.3d at 1000. Apple has thus satisfied this threshold requirement.

B. Apple Has a Significant Interest in the Property and Transactions That Are
at Issue in this Lawsuit

Apple has also met the second requirement for intervention as a matter of right
under Rule 24(a): an interest in the subject matter of the litigation that is “direct, substantial,
[and] legally protectable.” Ozee v. Am. Council on Gift Annuities, Inc., 110 F.3d 1082, 1096 (5th
Cir. 1997); Espy, 18 F.3d at 1207 (“[T]he ‘interest test’ is primarily a practical guide to disposing
of lawsuits by involving as many apparently concerned persons as is compatible with efficiency
and due process.”) (citations omitted). As set out above, Apple holds a license to the patents in
suit, the value of which depends on Apple’s ability to offer its licensed products and services to
the Developers in return for the Developers’ agreement to pay Apple. License rights such as
these are “protectable under the law” and provide a sufficiently close relationship to the litigation
to satisfy this requirement. See, e.g., GE Co. v. Wilkins, 2011 WL 533549, at *2 (E.D. Cal. Feb.
11, 2011) (“[Intervenor] has properly alleged that it has a license in the technology underlying
the ’985 Patent, and it is clear that such a license is protectable under the law.”).

Second, Lodsys’s infringement allegations target Apple’s own products and
services and their facilitation of communication between the end users, the Apps, the App Store,

10

and other Apple technology. Courts have consistently held that a legally sufficient interest is
implicated where infringement allegations rest on an intervenor’s own products or services. See,
e.g., Chandler & Price Co. v. Brandtjen & Kluge, Inc., 296 U.S. 53, 55 (1935) (holding that
manufacturer’s intervention in infringement action against its customers is “necessary for the
protection of its interest”); Tegic Commc’ns Corp. v. Bd. Of Regents of the Univ. of Tex. Sys.,
458 F.3d 1335, 1344 (Fed. Cir. 2006) (“[T]o the extent that [interest of the manufacturer] may be
impaired by the Texas litigation, [manufacturer] may seek to intervene in that litigation.”);
Honeywell Int’l v. Audiovox Commc’ns Corp., 2005 WL 2465898, at *4 (D. Del. May 18, 2005)
(sufficient interest where intervenor made parts “at the heart” of infringement claims); IBM
Corp. v. Conner Periphs., Inc., 1994 WL 706208, at *5 (N.D. Cal. Dec. 13, 1994) (same).4

Finally, this litigation has fundamentally disrupted Apple’s relationships with the
Developers and with other developers, and places in jeopardy the revenue that Apple derives
from those relationships. The potential loss of revenue, developers, or goodwill provides yet
another independent basis upon which to find that Apple has a legally sufficient interest in the
property at issue. Cf., e.g., U.S. Ethernet Innovations, LLC v. Acer, Inc. et al., No. 6:09-cv-448,
at *4 (E.D. Tex. May 10, 2010) (Love, J.) (acknowledging significant interest in litigation based
on, inter alia, potential loss of customers and goodwill, but ultimately granting permissive
intervention without reaching question of intervention as of right) (Ex. E to the Sanders Decl.).

C. Apple’s Ability to Protect its Interests Will Be Impaired if it is Not Permitted
to Intervene Here

As set out above, Apple has demonstrated that its interests in the licensed
technology at issue will be impaired if it is not allowed to intervene. A finding that Lodsys is

_____________________

4 While indemnification obligations are sometimes at issue in cases under Rule 24(a), the
cases do not require or place any dispositive weight on any such obligation, as set out
above. And any such obligation is of course unnecessary for permissive intervention.

11

permitted to assert infringement claims against the Developers based on their use of licensed
Apple technology would effectively negate Apple’s license rights, as well as harm Apple’s
ability to preserve its substantial economic interest in its Developer relationships and sales of its
licensed products and services. See, e.g., Codex Corp. v. Milgo Elec. Corp., 553 F.2d 735, 738
(1st Cir. 1977) (explaining that a “manufacturer must protect its customers . . . in order to avoid
the damaging impact of an adverse ruling against its products”); Honeywell, 2005 WL 2465898,
at *4 (holding that intervenor can “rightly claim . . . its interests will be impaired” where product
is “at the heart” of the case). Moreover, an adverse outcome may harm Apple’s ability to protect
its license rights in future litigation involving Lodsys and any number of other App developers,
providing an independent basis on which to find Apple has satisfied this prong. See, e.g.,
Heaton, 297 F.3d at 424 (holding that potential negative stare decisis effect is also sufficient).

D. The Developers May Not Adequately Represent Apple’s Interest in
Demonstrating That Lodsys’s Infringement Claims Are Exhausted

Finally, it is hornbook law that Apple’s burden in demonstrating that the existing
defendants will not adequately represent its interests is “minimal,” and requires no more than a
showing that the representation by those parties “may be” insufficient. Trbovich v. United Mine
Workers of Am., 404 U.S. 528, 538 n.10 (1972); accord, e.g., John Doe No. 1 v. Glickman,
256 F.3d 371, 380 (5th Cir. 2001) (“The potential intervener need only show that the
representation may be inadequate.”) (emphasis in original) (citations omitted).

Apple has met this requirement for several separate and independent reasons.
First, the Developers lack the resources to fully and fairly litigate the issue of whether Lodsys’s
claims are exhausted. The Developers are largely individuals, see, e.g., Docket No. 1 ¶¶ 5, 7
(identifying two of seven defendants as individuals), or small entities with limited resources.
See, e.g., http://www.manta.com/c/mmj0mt2/the-iconfactory-inc (defendant Iconfactory has

12

about six employees); http://www.manta.com/c/mmlhs8p/combay-inc (approximately two
employees for defendant Combay). Apple’s far superior resources alone constitute a ground on
which to find its interests may not be adequately represented. See, e.g., Bush v. Viterna, 740
F.2d 350, 357 (5th Cir. 1984) (this prong is met when “it is clear that the applicant will make a
more vigorous presentation of arguments than existing parties”); Teague v. Bakker, 931 F.2d
259, 262 (4th Cir. 1991) (“Given the financial constraints on the insureds’ ability to defend the
present action, there is a significant chance that they might be less vigorous than the Teague
Intervenors in defending their claim to be insureds under the ERC policy.”).

Moreover, even if the financial disparity between the parties were not in and of
itself sufficient to meet this prong, the interests of Apple and the Developers in this litigation
may ultimately diverge. While the Developers will likely be interested in resolving this case as
quickly and inexpensively as possible, Apple’s interest is in protecting its broader license rights
with respect to thousands of App developers for Apple products who may be the subject of future
Lodsys lawsuits or threats. This constitutes an independent basis upon which to find that
Apple’s interests may not be adequately represented absent intervention. See, e.g., Doe, 256
F.3d at 380-81 (noting that disparity of incentives between party with “broad” interest in
resolving issue and more narrow interest of intervening entity supported granting motion to
intervene); Heaton, 297 F.3d at 425 (“That the FDIC’s interests and Monogram’s may diverge in
the future, even though, at this moment, they appear to share common ground, is enough to meet
the FDIC's burden on this issue.”) (intervention appropriate where existing party possessed broad
public interest and party seeking to intervene possessed narrower economic interest).

Finally, the Developers may lack sufficient information and expertise regarding
Apple’s license rights and the nature and operation of Apple’s licensed technology to adequately

13

represent Apple’s interests. Apple’s superior information constitutes a third separate reason to
find that the Developers’ defense may not be adequate to protect Apple’s license rights.
Honeywell, 2005 WL 2465898, at *4 (“[B]ecause [intervenor] is uniquely situated to understand
and defend its own product, its interests are not adequately represented by existing parties to the
litigation.”); LG Elecs. Inc. v. Q-Lity Comp. Inc., 211 F.R.D. 360, 365-66 (N.D. Cal. 2002).

III. In The Alternative, Permissive Intervention is Appropriate Here Under Rule
24(b)

Even if Apple did not meet the standard for intervention as of right, however, this
motion should still be granted because Apple’s proposed defense and counterclaim present
numerous questions of fact and law that are common to the existing lawsuit. First, based on the
infringement allegations Lodsys has made to date, it is clear that both Apple and the existing
defendants will raise issues of patent exhaustion and first sale, requiring the Court to analyze
Apple’s rights under its license, the licensed technology that Lodsys has accused of
infringement, and the application of the exhaustion and first sale doctrines to Lodsys’s claims.

Second, additional common questions of fact exist with respect to the licensed
Apple products and methods that Lodsys appears to be accusing of infringement. Precisely how
the Developers use Apple’s SDKs, APIs, memory, software, hardware, and servers, as well as
the App Store itself—and precisely how those Apple products and services work—will be
factual questions with respect to both Apple’s exhaustion defense and counterclaim and Lodsys’s
existing infringement claims against the Developers. Finally, the Court will effectively be
required to engage in the same claim construction and infringement analysis with respect to both
Lodsys’s existing claims and Apple’s exhaustion defense, including the same analysis of the
relevant claim terms, specifications, prosecution histories, and Lodsys infringement allegations.

14

Under these circumstances, courts uniformly find that permissive intervention is
appropriate. For example, in Reid, 240 F.R.D. at 260 (Folsom, J.), the court granted permissive
intervention to Microsoft where, as here, Microsoft’s software was claimed to be a substantial
part of the allegedly infringing system. In doing so, the court noted that “Microsoft’s claims and
defenses share common questions of law and fact with the action by Plaintiffs against
Defendants . . . . Microsoft’s claims of invalidity and unenforceability raise the same questions
of law and fact as similar claims by Defendants because they are all asserted against the ’120
patent.” Id.; accord, e.g., TiVo Inc. v. AT&T Inc., No. 2-09-cv-259 (E.D. Tex. March 31, 2010)
(Folsom, J.) (permissive intervention where infringement claims rested on software provided by
Microsoft) (Ex. F to Sanders Decl.); Acer, No. 6:09-cv-448 (Love, J.) (permissive intervention
where patents were asserted against Intel technology incorporated in customer devices).

As in each of these cases, Apple’s proposed pleading relates to the same patents,
claims, products, and defenses that will be litigated here regardless of whether Apple is allowed
to intervene. Similarly, as set out above, this motion is timely and will result in no prejudice to
the existing parties. Permissive intervention is thus appropriate.

CONCLUSION

For each of the foregoing reasons, Apple respectfully requests that the Court grant
Apple’s motion and permit the filing of Apple’s proposed Answer and Counterclaim.

Apple asserts that it is entitled to intervene based on the License. Apple also asserts that it might lose revenues absent intervention. And Apple asserts that the defendants are allegedly too small and without financial resources to adequately represent Apple's purported interest. But all of Apple's assertions are legally and factually without merit for several reasons.

First, although Apple's Motion is based on the License, Apple ignores [redacted]

Second, Apple's own Motion demonstrates that its purported interest is, at best, purely economic. For example, Apple repeatedly speculates that this action could "lead to loss of significant revenues from all developers." Motion at 2. But courts have consistently held that economic interests do not satisfy the requirements for intervention. Apple's prediction that this lawsuit may hurt its relationship with Developers and may diminish revenues is also too speculative and contingent to satisfy the requirements for intervention.

1Apple Inc. ("Apple") "seeks to intervene because it is expressly licensed." Motion at 1. Because Apple filed [redacted] (the "License") under seal, the portions of this response that quote or reference the License have been redacted. An un-redacted version of this response has also been filed under seal. A copy of the License filed under seal is attached as Exhibit A to the Declaration of Jonathan C. Sanders [dkt. no. 4-3] ("Sanders Decl.").

1

Interactive Software, Inc. Accordingly, there can be no serious dispute that the defendants will more than adequately represent Apple's purported interest.

In short, the Court has myriad bases for denying Apple's Motion, and the Court should do so now before any additional needless expense and judicial resources are wasted concerning a purported interest that [redacted]

II. ARGUMENT

"The movant bears the burden of establishing its right to intervene." Adams v. Consol. Wood Products Employee Ben. Plan, No. 2:10-CV-310-TJW, 2011 WL 665821, *4 (E.D. Tex. Feb. 14, 2011). As discussed in detail below, Apple fails to satisfy its heavy burden because (a) as a threshold matter, [redacted]
(b) as an additional threshold matter, Apple's Motion is premature; (c) Apple is not in entitled to intervention as a matter of right under Rule 24(a); and (d) Apple is not in entitled to permission intervention under Rule 24(b).

A. Threshold Matter:

[redacted] As a threshold matter, therefore, Apple's Motion should be denied. But
even assuming arguendo that [redacted], at the very least, Apple's
Motion should be stayed pending discovery concerning whether [redacted]2

1. As a Matter of Law, [redacted]

Apple asserts that its legally protectable interest — and the underlying basis for its request to intervene — derives from the License. See Motion at 1 ("Apple has an interest in the

2Apple alleges that, "[b]ecause Apple is licensed to offer products and services that embody the patents in suit to its
Developers, under the patent law doctrines of exhaustion and first sale, Developers are entitled to use, free from
claims of infringement of the patents in suit." Proposed Answer at |8. Accepting Apple's allegations as true for
purposes of Apple's Motion only, Lodsys does not challenge here Apple's assertions regarding the scope of the
license grant {i.e., [redacted]); rather, this response focuses only on
whether [redacted] Lodsys reserves all rights to challenge all of Apple's assertions, if
Apple is permitted to intervene.

2

property that is at the center of this dispute, namely, its license to the patents in suit...."). A patent, however, is "a bundle of rights which may be divided and assigned, or retained in whole or part." Vaupel Textilmaschinen KG v. Meccanica Euro Italia SPA, 944 F.2d 870, 875 (Fed. Cir. 1991). "[P]arties are free to assign some or all patent rights as they see fit based on their interests and objectives." Fairchild Semiconductor Corp. v. Power Integrations, Inc., 630 F. Supp. 2d 365, 372 (D. Del. 2007) (citing Morrow v. Microsoft Corp., 499 F.3d 1332, 1348 n.8 (Fed. Cir. 2007).

"To determine whether a patent transfer agreement conveys all substantial rights under a patent to a transferee or fewer than all of those rights, a court must assess the substance of the rights transferred and the intention of the parties involved." Intellectual Prop. Dev., Inc. v. TCI Cablevision of California, Inc., 248 F.3d 1333, 1342 (Fed. Cir. 2001). "In making such a determination, it is helpful to focus on each party's collection of sticks within the bundle of patent rights as a result of the agreement." IP Innovation LLC v. Google, Inc., 661 F. Supp. 2d 659, 663 (E.D. Tex. 2009) (emphasis added).

Here, [redacted]See, e.g., Frazier v. Map Oil Tools, Inc., No. CIV.A.C-10-4, 2010 WL 2352056, at *2 (S.D. Tex. June 10, 2010) ("Movant's standing to sue and thus its ability to intervene depends in large part on whether it is an exclusive or non-exclusive licensee, and more particularly whether it has the right to prevent others from using and selling the patented product.").

2. At the Very Least, Apple's Motion Should Be Stayed Pending Discovery.

"[W]here the provisions of a contract are plain and unambiguous, 'evidence outside the
four corners of the document as to what was actually intended is generally inadmissible." Ace Capital v. Varadam Found, 392 F. Supp. 2d 671, 674 (D. Del. 2005). Here, [redacted] Assuming arguendo[redacted] then Apple's Motion should be stayed and Lodsys should be allowed to conduct discovery
concerning [redacted] For example, [redacted] But Apple failed to provide this court with [redacted]

[redacted] Discovery concerning [redacted]See Declaration of Christopher M. Huck (the "Huck Decl."), Ex. 1 ("Patentees may also consider including a provision in the license that make validity challenges to a licensed patent a material breach allowing termination.").

Moreover, Apple has repeatedly refused to provide information relevant to its request for
intervention. For example, Apple previously refused to provide even Lodsys's counsel with a
complete copy of the License and, instead, redacted all but two paragraphs of the License.
Tellingly, the two (and only two) paragraphs that Apple disclosed did not include [redacted]
Subsequently, Apple filed the License under seal for attorneys' eyes only, so that Lodsys could
not review the actual terms of License, [redacted] Apple's disingenuous conduct
and repeated attempts to hide the ball should not be rewarded. Accordingly, if [redacted] then Apple's Motion should be stayed and Lodsys should be allowed (among other issues)[redacted]

Intervention is premature where (as here) the defendants have not yet answered the complaint and, thus, the movant (and the Court) can only speculate concerning whether the

5

requirements of Rule 24 are satisfied. See Flynn v. Hubbard, 782 F.2d 1084, 1089 (1st Cir. 1986) ("It would be premature to decide now whether the interests asserted by [movants] meet the requirements of Rule 24."); see also Espy, 18 F.3d at 1206 ("A better gauge of promptness is the speed with which the would-be intervenor acted when it became aware that its interests would no longer be protected by the original parties.") (emphasis added).

Here, Apple moved to intervene only nine days after Lodsys filed its original Complaint. No defendant has answered the original Complaint or Lodsys's Amended Complaint. And there is not even the slightest hint yet that the defendants will inadequately represent Apple's purported interest. In fact, Apple trumpets the "early stage" of this proceeding:

Apple moved while the case was still in its infancy: the lawsuit was filed just over a week ago, the defendants have not yet answered Lodsys's Complaint (indeed, upon information and belief, they have not yet even been served with the summons and Complaint), and no other significant developments have taken place.

Motion at 9 (emphasis added). Apple also admits (several times) in its Motion that the defense and declaratory counterclaim raised in its Proposed Answer "will likely be raised by every defendant." Motion at 10 (emphasis added). Thus, at this "early stage" in the proceedings, Apple's assertion that its purported interests will not be protected by the defendants is pure speculation. See Shaunfieldv. Citicorp Diners Club, Inc., No. 3:04-CV-1087-G, 2005 U.S. Dist. LEXIS 11244, *8-9 (N.D. Tex. June 8, 2005) ("Timeliness for purposes of intervention is determined from the point that the intervenor learns that its interest in the lawsuit would not be adequately protected by the other parties, not from inception of the case or the date the intervenor learned of the litigation.") (emphasis added).

Moreover, Apple repeatedly postulates that its "rights will not be adequately protected by the current defendants in this case, because Lodsys has chosen to assert these claims against Developers who are individuals or small entities with far fewer resources." Motion at 2 (emphasis added). But the premature nature of Apple's Motion is illuminated by the fact that Lodsys's Amended Complaint names as defendants several large Developers with substantial financial and technical resources, including Electronic Arts (see Huck Decl., Ex. 2 (net revenues

6

of $3,589 billion)) and Rovio. See Huck Decl., Ex. 3 (three of five "Top Paid iPad Apps"). Even assuming arguendo that Apple's characterization of the original defendants is accurate (which it is not), Apple cannot seriously dispute that the additional defendants will more than adequately represent Apple's purported interests. "Accordingly, inasmuch as [Apple] seek[s] to intervene in anticipation of an actual need for intervention, the Court shall deny the motion as premature." Microsoft, 2002 WL 319784 at *2.

C. Apple is Not Entitled to Intervention as a Matter of Right Under Rule 24(a).

A movant seeking to intervene as of right under Rule 24(a) must satisfy four requirements:

(1) the movant must timely file a motion; (2) the movant must claim an interest in the property or transaction that is the subject of the action; and (3) the movant must show that disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest; and (4) the movant's interest must not be adequately represented by existing parties to the litigation

"The timeliness clock does not run from the date the potential intervener knew or reasonably should have known of the existence of the case into which she seeks to intervene." John Doe No. 1 v. Glickman, 256 F.3d 371, 377 (5th Cir. 2001) (emphasis added). Rather, "[t]he timeliness clock runs either from the time the applicant knew or reasonably should have known of his interest,...or from the time he became aware that his interest would no longer be protected by the existing parties to the lawsuit." Edwards v. City of Houston, 78 F.3d 983, 1000 (5th Cir. 1996) (emphasis added).

Here, Apple's Motion is untimely because it is premature. Indeed, as discussed above, the underlying theme of Apple's Motion — i.e., that the defendants were supposedly too small and without adequate resources — has already been proved false by Lodsys's Amended

7

Complaint. No additional judicial resources should be wasted speculating about whether Apple's request for intervention may some day in the future be ripe. See Dial v. P"ship for Response & Recovery, No. 1:09-CV-218, 2010 WL 1054884, *2 (E.D. Tex. Feb. 23, 2010) ("Essentially, ripeness is 'peculiarly a question of timing.'"). Accordingly, Apple's Motion should be denied as moot or, at the very least, stayed until the defendants have answered Lodsys's Amended Complaint.

"To meet the second requirement for Rule 24(a)(2) intervention, a potential intervenor
must demonstrate that he has an interest that is related to the property or transaction that forms the basis of the controversy." James v. Harris County Sheriffs Dept., No. CIV.A. H-04-3576, 2005 WL 1878204, *2 (S.D. Tex. Aug. 9, 2005). "Not any interest, however, is sufficient; the interest must be "direct, substantial, [and] legally protectable." Saldano v. Roach, 363 F.3d 545, 551 (5th Cir. 2004) (emphasis added). "Economic interest alone is insufficient, as a legally protectable interest is required for intervention under Rule 24(a)(2)." New Orleans Pub. Serv., Inc. v. United Gas Pipe Line Co., 732 F.2d 452, 463 (5th Cir. 1984). "Further, the interest must be 'one which the substantive law recognizes as belonging to or being owned by the applicant.'" Ouch v. Sharpless, 237 F.R.D. 163, 166 (E.D. Tex. 2006).

First, Apple asserts that its "[ljicense rights" are "protectable under the law." Motion at 10. But, as discussed above, [redacted]

8

See Adams, 2011 WL 665821 at *4 ("intervention is improper where the intervenor does not itself possess the only substantive legal right it seeks to assert in the action").

Second, relying on cases involving the relationship between manufacturers and customers, Apple asserts that "Courts have consistently held that a legally sufficient interest is implicated." Motion at 11. But the authority on which Apple relies is inapposite, because the defendants (and other Developers) are not Apple's customers. In fact, based on a review of publically available information, it appears that (at Apple's insistence) Apple and the Developers expressly "acknowledge and agree that their relationship under this Schedule 1 is, and shall be, that of principal and agent, and that [Developers], as principal, are, and shall be, solely responsible for any and all claims and liabilities involving or relating to, the Licensed Applications..." Huck Decl., Ex. 4 ("iPhone Developer Program License Agreement") at Schedule 1, TJ1.3.4
And, contrary to Apple's assertions in its Motion, Apple expressly disclaims any relationship between Developers and Apple except for Developers as principals. See id. at fl54 ("Except for the agency appointment as specifically set for in Schedule 1 (if applicable), this Agreement will not be construed as creating any other agency relationship, or partnership, joint venture, fiduciary duty, or any other form of legal association between You and Apple....") (emphasis added). Thus, by Apple's design, the relationship between Apple and the Developers is the complete opposite of the manufacturer and customer relationship.

Third, Apple asserts "this litigation has fundamentally disrupted Apple's relationships with the Developers and with other developers." Motion 11. But Apple does not even attempt to qualify or quantify the alleged "disruption" and, in any event, an interest must be more concrete. See Rigco, Inc. v. Rauscher Pierce Refsnes, Inc., 110 F.R.D. 180, 183 (N.D. Tex. 1986) ("The term 'interest' is narrowly read to mean a direct and substantial interest in the proceedings.").

Fourth, Apple asserts that "[t]he potential loss of revenue, developers, or goodwill provides yet another independent basis" for intervention. Motion at 11. But "something more

than an economic interest is necessary." Adams, 2011 WL 665821 at *4 (emphasis added). Indeed, "courts in this circuit have found interests to be purely economic and insufficient under Rule 24(a)(2) when the party seeking to intervene fails to assert a claim for which it is the real party in interest." In re Babcock & Wilcox Co., No. CIV. A. 01-912, 2001 WL 1095031, *4 (E.D. La. Sept. 18, 2001); see also Bouchard v. Union Pac. R. Co., No. CIV.A.H-08-1156, 2009 WL 1506677, *2 (S.D. Tex. May 28, 2009) ("This requires a showing of something more than a mere economic interest; rather, the interest must be 'one which the substantive law recognizes as belonging to or being owned by the applicant.'").

Fifth, relying on Negotiated Data Solutions, LLC v. Dell, Inc., No. 2:06-cv 528 (E.D. Tex. Oct. 23, 2008), and U.S. Ethernet Innovations, LLC v. Acer, Inc. et al, No. 6:09-cv-448 (E.D. Tex. May 10, 2010), Apple asserts that, "under these exact circumstances, courts in this district have concluded that intervention as a matter of right is appropriate." Motion at 8. But Apple seriously overstates the application of both cases. For example, the motion to intervene in Negotiated Data Solutions was partially unopposed, the Order itself (Sanders Decl., Ex. D) is one paragraph and does not contain the Court's analysis, and the underlying briefing is under seal, so there is no way to glean any further information. Similarly, in U.S. Ethernet Innovations, the Court's Order (Sanders Decl., Ex. E) focused on Intel's (the proposed intervenor) indemnification obligations with the defendants as establishing a legal relationship and Intel was apparently not licensed by the plaintiff, so a finding of infringement could implicate Intel's products. Neither factor is applicable here, because Apple does not assert any indemnification obligations and Apple is licensed.5

Because Apple lacks any direct, substantial and legally protectable interest, Apple's Motion should be denied.

5Apple admits that "indemnification obligations are sometimes at issue in cases under Rule 24(a)." Tellingly, however, Apple does not discuss its lack of indemnity obligations to the Developers. Indeed, although Apple's Motion hints that it may have obligations to the Developers, the opposite is true because Apple has required the Developers to "agree to indemnify, defend and hold harmless Apple ... from any and all claims, losses, liabilities, damages, expenses and costs ... as a result of... any claims that [Developers'] Applications or the distribution, sale, offer to sale, use or importation of [Developers'] Applications (whether alone or as an essential part of a combination)... infringe any third party intellectual property or proprietary rights...." Huck Dec, Ex. 4 at 1.

10

3. Apple's Purported Interest Will Not Be Impaired Absent Intervention.

Apple asserts that, unless it is allowed to intervene, its interests will be impaired because
"[a] finding that Lodsys is permitted to assert infringement claims against the Developers ... would effectively negate Apple's license rights." Regardless of whether Apple is allowed to intervene, however, this Court can (and should) permit Lodsys to assert infringement claims against the defendants. In other words, Apple's presence in this action is not dispositive of that question. Instead, the relevant question for purposes of Apple's Motion is whether the defendants will raise the same issues of patent exhaustion raised in Apple's Proposed Answer. Apple has repeatedly answered that question in the affirmative: "it is clear that both Apple and the existing defendants will raise issues of patent exhaustion and first sale." Motion at 14.

Apple also asserts that without intervention this action will "harm Apple's ability to preserve its substantial economic interest in its Developer relationships and sales of its licensed products and services." Motion at 12. But, as discussed above, economic interests are insufficient. See Lincoln Gen. Ins. Co. v. Aisha's Learning Ctr., No. CIV.A. 3:04-CV-0063B, 2004 WL 2533575, *2 (N.D. Tex. Nov. 9, 2004). Apple's bald prediction that it could possibly lose money, relationships, or sales is also too speculative to satisfy Apple's burden. See Taylor Communications Group, Inc. v. Sw. Bell Tel. Co., 172 F.3d 385, 388-89 (5th Cir. 1999) ("Taylor's interest in the underlying litigation is too speculative and general to support intervention as of right."); Washington Elec. Co-op., Inc. v. Massachusetts Mun. Wholesale Elec. Co., 922 F.2d 92, 96-97 (2d Cir. 1990) ("interest that is remote from the subject matter of the proceeding, or that is contingent upon the occurrence of a sequence of events before it becomes colorable, will not satisfy the rule").

Because Apple's purported interest will not be impaired absent intervention, Apple's Motion should be denied.

4. Apple's Purported Interest is More Than Adequately Represented.

Apple asserts that "its burden in demonstrating that the existing defendants will not
adequately represent its interests is 'minimal.'" Motion at 12. But Apple ignores that the Fifth

11

Circuit has cautioned that however "'minimal' this burden may be, it cannot be treated as so minimal as to write the requirement completely out of the rule." Bush v. Viterna, 740 F.2d 350, 355 (5th Cir. 1984). Indeed, "[w]hile the presumption may be rebutted on a relatively minimal showing, [Apple] must 'produce something more than speculation as to the purported inadequacy."' League of United Latin Am. Citizens, Council No. 4434 v. Clements, 884 F.2d 185, 189 (5th Cir. 1989).

Apple also ignores that "[t]he test in the Fifth Circuit is that 'when the party seeking intervention has the same ultimate objective as a party to the suit, a presumption arises that its interests are adequately represented, against which the petitioner must demonstrate adversity of interest, collusion, or nonfeasance." United States v. Texas Educ. Agency (Lubbock Indep. Sch. Dist.), 138 F.R.D. 503, 506 (N.D. Tex. 1991) (emphasis added). And here Apple admits that the defendants share the same ultimate objective: "Apple's proposed Answer in Intervention asserts a single defense and declaratory counterclaim, both based on the patent law doctrines of exhaustion and first sale. Based on Lodsys's infringement allegations, these very same issues will likely be raised by every defendant.'" Motion at 10 (emphasis added).

Apple does not (and cannot) rebut the presumption of adequate representation with any evidence of collusion. See Kneelandv. Nat'l Collegiate Athletic Ass 'n, 806 F.2d 1285, 1288 (5th Cir. 1987) (finding adequate representation based on presumption). Apple's assertions regarding alleged "adversity of interest" and "nonfeasance" also fail for several reasons.

First, Apple asserts that "the Developers lack the resources to fully and fairly litigate the issue of whether Lodsys's claims are exhausted." Motion at 12. Apparently Apple believes it is entitled to intervene simply because it is allegedly larger and has more money than some of the defendants. But that is not the test, and Apple's assertion is far too speculative. See Villas at Parkside Partners v. City of Farmers Branch, 245 F.R.D. 551, 555 (N.D. Tex. 2007) ("While FAIR argues that the city lacks financial resources, without more, the court does not determine that this is enough to overcome the presumption that the city can defend its interests and those of its residents."); Butler, Fitzgerald & Potter v. Sequa Corp., 250 F.3d 171, 181 (2d Cir. 2001)

Second, although they may not be as large as Apple, even the defendants named in Lodsys's original Complaint are not without significant financial resources. For example, Illusion Labs has publically disclosed that its total revenue for fiscal year-ended June 30, 2010 was (US) $5.1 million, with total assets of (US) $4.6 million. See Huck Decl., Ex. 5. And Quickoffice purports to have "[ijnstalled on over 300 million devices in more than 180 countries." See Huck Decl., Ex. 6. In any event, any assertion that the defendants are "small entities with limited resources" (Motion at 12) is belied by Lodsys's Amended Complaint, which names some of the largest (and financially significant) Developers in the world.

Third, Apple asserts that the "interests of Apple and the Developers in this litigation may ultimately diverge." Motion at 13. But the mere possibility that, in the future, "the interests of the defendants and [proposed intervenor] might clash does not demonstrate the necessary adverse interest." Int'l Tank Terminals, Ltd. v. M/VAcadia Forest, 579 F.2d 964, 968 (5th Cir. 1978).

Fourth, Apple asserts that "[w]hile the Developers will likely be interested in resolving this case as quickly and inexpensively as possible, Apple's interest is in protecting its broader license rights [against] future Lodsys lawsuits or threats." Motion at 13. "However, the mere possibility that a party may at some future time enter into a settlement cannot alone show inadequate representation." Bush, 740 F.2d at 358. And a settlement by any defendant would not create precedent unfavorable to Apple.7

6Apple relies on Teagne v. Bakker, 931 F.2d 259 (4th Cir. 1991). But there, two defendants did not retain counsel,
were in federal prison, and "without any income except the minimal income provided federal prisoners of
approximately eleven cents per hour." And the other defendant described herself as '"of quite modest means' and as
one who 'lives and works in a poor south Bronx neighborhood' as a minister of a small church." 931 F.2d at 262.

7Apple relies on John Doe No. 1 v. Glickman, 256 F.3d 371 (5th Cir. 2001), and Heaton v. Monogram Credit Card
Bank of Georgia, 297 F.3d 416 (5th Cir. 2002). But in each of those cases, the "broader" interest was the
government agencies' (as opposed to a private party's) obligation to be legally accountable to the public as a whole.
In sharp contrast here, Apple's desire to assert the doctrines of patent exhaustion and first sale is (by Apple's own
admission) identical to the defendants.

13

Fifth, Apple asserts that it has "superior" technical information and expertise. See
Motion at 14. But (again) Apple prematurely filed its Motion before Lodsys's Amended
Complaint, which includes large developers with substantial technical resources and expertise.
In addition, there is no reason that Apple must be a party to this action to deploy its information
and expertise on behalf of the defendants. See Texas Educ. Agency, 138 F.R.D. at 506. Except
to the extent [redacted], Apple is free to informally advise the
defendants or petition for amicus status where appropriate. See Bush, 740 F.2d at 359 (finding "the position of amicus ... more appropriate").

Because Apple's purported interest is more than adequately represented, Apple's Motion should be denied.

D. Apple is Not Entitled to Permissive Intervention Under Rule 24(b).

A movant seeking permissive intervention under Rule 24(b) must satisfy three requirements: "(1) the movant must show an independent ground for jurisdiction; (2) the motion must be timely; and (3) the movant's claim or defense and the main action must have a question of law and fact in common." Hopwood v. State, No. CIV. A-92-CA-563-SS, 1994 WL 242362, *2 (W.D. Tex. Jan. 20, 1994). "[A]n additional factor to be considered in determining permissive intervention is 'whether the interveners' interests are adequately represented by other parties.'" Texas Educ. Agency, 138 F.R.D. at 508. "The denial of permissive intervention [is] also appropriate [where] the Proposed Intervenors bring no new issues to this action." Ingebretsen on Behalf of Ingebretsen v. Jackson Pub. Sch. Dist., 88 F.3d 274, 281 (5th Cir. 1996). Finally, the Court must consider "whether intervention will unduly delay the proceedings or prejudice existing parties." Kneeland, 806 F.2d at 1289.

Apple asserts that it is entitled to permissive intervention "because Apple's proposed defense and counterclaim present numerous questions of law and fact." Motion at 14. But "[t]he existence of a common question of law or fact does not automatically entitle an applicant to intervene." Texas Educ. Agency, 138 F.R.D. at 507. Rather, "[p]ermissive intervention 'is wholly discretionary with the [district] court ... even though there is a common question of law

14

or fact, or the requirements of Rule 24(b) are otherwise satisfied." New Orleans Pub. Serv., 732 F.2d at 470-71 (emphasis added); see also Adams, 2011 WL 665821 at *5 ("Aside from these requirements, the decision whether to grant intervention under Rule 24(b) depends on the facts of each case and is entirely within the court's discretion.").

Here, several factors preclude permissive intervention. Apple cannot demonstrate an independent ground for jurisdiction because (as discussed above) [redacted]See State Tobacco,
1999 WL 1022129, *2 (E.D. Tex. Nov. 5, 1999) ("courts of this circuit have looked to the standing requirements of Article III"). Apple's Motion is also untimely because it is premature. Apple's purported interest will be more than adequately represented by the defendants. Apple admits that it brings no new issues. See Bush, 740 F.2d at 359 ("Where he presents no new questions, a third party can contribute usually most effectively and always most expeditiously by a brief amicus curiae and not by intervention."). And, although "these very same issues will likely be raised by every defendant" (Motion at 10), Apple's admitted reason for intervention is to use its allegedly "far superior resources" (Motion at 13), apparently for no other reason than to burden Lodsys and this proceeding. See Fed. R. Civ. P. 24 ("In exercising its discretion, the court must consider whether the intervention will unduly delay or prejudice the adjudication of the original parties' rights."). Accordingly, this Court should exercise its broad discretion and deny Apple's request for permissive intervention.8

III. CONCLUSION

Apple's
economic interest is insufficient. And there can be no serious dispute that the defendants will adequately represent Apple's purported interest. For all of the above reasons, Apple's Motion should be denied.

Lodsys’s opposition fails to rebut the appropriateness of Apple’s intervention.
Lodsys does not contest that Apple’s technology and Apple’s interest in protecting the value of
its License lie at the heart of this case, that the present defendants lack the technical information
and expertise regarding that technology and the License to fully and fairly develop the
exhaustion defense, and that Apple’s proposed defense and counterclaim share numerous
common issues of law and fact with the existing suit. Thus, Apple’s motion to intervene should
be granted.1

ARGUMENT

I. Lodsys’s License Argument Is Both Baseless and Irrelevant at This Stage

[REDACTED]

_____________________

1 All defined terms in Apple’s opening brief will have the same meaning when used herein.

Third, [REDACTED], disputed issues of contractual
interpretation or intent cannot be resolved on a motion to intervene. See, e.g., Mendenhall v.
M/V Toyota Maru No. 11 v. Panama Canal Co., 551 F.2d 55, 56 n.2 (5th Cir. 1977) (all nonconclusory
allegations must be accepted as true when considering intervention). The motion
cannot be stayed pending discovery, as Lodsys argues, Opp. at 4-5, because “the factual
allegations of the complaint are assumed to be true,” and as a result, “discovery on [the] claims
before ruling on the motion to intervene is as irrelevant as it would be if made in the context of a
motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6).” Pin v. Texaco, Inc., 793 F.2d 1448,
1450 (5th Cir. 1986).3 Factual issues concerning the construction of this provision must be
resolved on the merits, not at the pleading stage on a motion to intervene.

II. Apple Has Met the Requirements for Intervention of Right

A. Lodsys Concedes That Apple’s Motion Was Not Filed Too Late

Lodsys’s argument that the Motion is premature is similarly flawed. First,
Apple’s interest in the litigation is far from speculative. Indeed, Lodsys does not even dispute
Apple’s statements that its technology lies at the heart of this case. See Opp. at 5-7. The
circumstances here are, therefore, far different from those described in the cases cited by Lodsys,

_____________________

2 Lodsys’s reliance on case law regarding non-exclusive licensees’ standing to assert the
patents is irrelevant. Cf., e.g., Frazier v. Map Oil Tools, 2010 WL 2352056, at *4 (S.D.
Tex. June 10, 2010) (finding movant seeking to intervene as plaintiff in infringement
action lacked standing due to non-exclusive licensee status). Apple seeks to intervene to
protect its rights under the License, not to assert the patents against any third party.

3 Lodsys also contends that Apple has “repeatedly refused to provide information relevant
to its request for intervention.” Opp. at 5. But Apple provided a complete copy of the
License as Exhibit A to its supporting declaration. See generally Sanders Decl., Ex. A.

2

where the intervenor did not even know whether its interests would ultimately be implicated;4 there is no dispute here that Apple’s license and exhaustion defense will be central to this case.

Second, no authority cited by Lodsys holds that a motion to intervene can be
“untimely” because it is too early. On the contrary, Lodsys fails to distinguish or rebut Sierra
Club v. Glickman, 82 F.3d 106, 109 n.1 (5th Cir. 1996), cited in Apple’s opening brief at page 9,
where the court held, “[t]he timeliness requirement only bars intervention applications made too
late.” Finally, even if a motion to intervene could ever be filed too early, Lodsys’s argument
would still fail because it has not articulated any prejudice resulting from Apple’s Motion.

B. Apple’s Interest Is More Than Economic

Lodsys’s argument that Apple has identified nothing more than an “economic”
interest in the case, Opp. at 8-10, simply ignores the authorities cited by Apple in its opening
brief, which hold unambiguously that a license is itself a sufficient property interest as a matter
of law. See Motion at 10-11 and cases cited therein. Instead, Lodsys relies on cases that are
unrelated to license rights and thus irrelevant here. See, e.g., Saldano v. Roach, 363 F.3d 545,
551 (5th Cir. 2004) (prosecutor had insufficient interest in habeas case). Moreover, even if
Apple were not licensed, courts have held expressly that intervention to protect a supplier’s
customers from infringement claims is itself “necessary for the protection of its interest.”
Chandler & Price Co. v. Brandtjen & Kluge, Inc., 296 U.S. 53, 55 (1935).

Lodsys also argues that Apple’s interest is insufficient because there is no
indemnification obligation here, and because Apple is formally referred to as the “agent” of the

___________________

4E.g., U.S. v. Microsoft Corp., 2002 WL 319784, at *2 (D.D.C. Jan. 28, 2002) (motion to
intervene related to potential motions in the main action that had not yet even been filed).
Lodsys also attempts to rely on cases that do not even relate to intervention and thus have
no bearing here. See, e.g., Ramirez v. Tex. Low-Level Radioactive Waste Disposal Auth.,
28 F. Supp. 2d 1019, 1020-21 (W.D. Tex. 1998) (on standing generally, not motions to
intervene).

3

developers in the context of a separate Developer Agreement. Opp. at 9. But Lodsys cites not a
single authority for the proposition that an indemnification clause is required for a sufficient
property interest, and, as set out in Apple’s opening brief and uncontested here, none of the cases
in this area have found any such requirement. See Motion at 10-11. Similarly, the fact that
Apple refers to itself as an “agent” of developer “principals” in other contexts is irrelevant to this
motion; Apple provides products and services to the App Makers in exchange for payment,
precisely the type of supplier-customer relationship courts have found sufficient to permit
intervention. See id. Finally, even if Lodsys’s argument had any merit, the Court cannot at this
stage make a factual determination regarding disputed terms of a different contract outside the
pleadings. Mendenhall, 551 F.2d at 56 n.2. Those issues must be resolved through discovery.

C. Apple’s Interest Will Inevitably Be Impaired Absent Intervention

Lodsys’ contention that Apple’s interest is too speculative to justify intervention
at this stage ignores the pleadings. Opp. at 11. Apple has sufficiently alleged impairment of its
interests: Apple’s License lies at the heart of this case, Lodsys has already sued numerous
significant Apple customers and threatened dozens of others, and a boycott of some of Apple’s
core products by App developers has been proposed. See Supp. Sanders Decl. ¶ 3, Ex. A, ¶ 9;
Mendenhall, 551 F.2d at 56 n.2 (allegations must be accepted as true).

Lodsys also argues that the present defendants can now adequately represent
Apple’s interests, because Lodsys added several larger defendants—after Apple filed its
motion—who will argue exhaustion. Opp. at 11-14. On any motion to intervene, the parties will
assert common defenses; it is the difference in expertise, objectives, and resources, all of which
are present here, that renders intervention proper. Although some of the new defendants may

4

have greater resources than the original defendants, Lodsys does not contest the fact that none of
the defendants have the technical information, expertise, and knowledge regarding how Apple’s
technology works or the negotiation and intent of the License itself to fully articulate and
develop Apple’s exhaustion defense. Motion at 12-14 and cases cited therein. This distinction
alone is sufficient. Honeywell Int’l v. Audiovox Commc’ns Corp., 2005 WL 2465898, at *4 (D.
Del. May 18, 2005) (“[B]ecause [intervenor] is uniquely situated to understand and defend its
own product, its interests are not adequately represented by existing parties to the litigation.”).

III. Apple Has Met The Requirements For Permissive Intervention

Finally, the Court should allow permissive intervention because Lodsys disputes
none of the facts or law set out in Apple’s opening brief establishing that permissive intervention
is appropriate. To the contrary, Lodsys concedes that Apple’s Motion raises many common
issues of law and fact to those likely to be raised by the parties to this action. Opp. at. 14-15.
Lodsys does not distinguish any of the cases in this district that have allowed intervention under
these precise circumstances, and does not offer a single authority to the contrary. See id.5

In addition, Lodsys offers no legal, factual, or logical explanation for why it
would be more efficient to resolve the complex issues surrounding Apple’s License without
Apple in this case. The Court should follow the case law of this district and circuit and exercise
its discretion to allow intervention under Rule 24(b).

_______________________

5 Lodsys quibbles with Apple’s citations to TiVo Inc. v. AT&T Inc., Negotiated Data
Solutions, LLC v. Dell, Inc., and U.S. Ethernet Innovations, LLC v. Acer, Inc. et al. on the
grounds that certain aspects of the motions were unopposed, one of the orders was not
long enough for Lodsys’s liking, and in one case some—but not all or even most—of the
defendants had potential indemnification claims. Opp. at 10, 15. But not one of those
cases depended on an indemnification obligation, and Lodsys distinguishes none of them
on the merits. Lodsys also misleadingly suggests that the underlying briefing in
Negotiated Data was unopposed and under seal, when Intel’s reply is publicly available
and clearly sets out the disputed issues. See Negotiated Data Solutions v. Dell, Inc., Civ.
A. No. 2:06-CV-528 (CE) (Docket No. 124) (Sept. 17, 2008).

PLAINTIFF LODSYS, LLC'S REDACTED SURREPLY TO
APPLE INC.'S REPLY IN SUPPORT OF MOTION TO INTERVENE

REDACTED VERSION

A. Apple Ignores the Plain and Unambiguous Terms of the License.

Apple asserts that "Lodsys's License Argument" is supposedly irrelevant "for at least three reasons." Reply In Support Of Motion To Intervene [dkt. no. 35] (the "Reply") at 1. As discussed below, each of Apple's "three reasons" fails as a matter of law.

1. The Defendants and Lodsys are Each a [REDACTED].

Apple asserts that [REDACTED] Reply at 1. But as a
threshold matter, Apple does not dispute (nor could it) that each of the defendants is a [REDACTED]. Apple also does not dispute (nor could it) that at least one (if not all) of the defendants [REDACTED]. In fact, several defendants filed a purported statement in support of Apple's motion to intervene expressly stating that they dispute that "the Asserted Patents are valid, enforceable and infringed." See Statement In Support of Apple's Motion To Intervene [dkt. no. 37] ("Supporting Statement") at 2 (emphasis added). Accordingly, because the defendants are each a [REDACTED] under the plain and unambiguous terms
of the License, for that reason alone, Apple's Motion should be denied as a matter of law.1

Moreover, Apple's assertion that somehow Lodsys is not a [REDACTED] is
legally and factually without merit for several reasons.

First, under the plain and unambiguous terms of the License, the parties to the License are [REDACTED]. Apple cannot transform Lodsys into a [REDACTED] by ignoring (or changing) the plain and unambiguous terms of the License. See, e.g., AES Puerto Rico, L.P. v. Alstom Power, Inc., 429 F. Supp. 2d 713, 717 (D. Del. 2006) ("if the language of a contract is plain and unambiguous, a court should construe the contract according to its terms").

_____________________

1 Defendants have not yet answered the complaint. But there can be no serious dispute that at least one of the defendants (i.e., [REDACTED]) will assert one or more counterclaims (i.e., [REDACTED]) for invalidity. The fact that defendants have not yet answered the complaint only highlights why Apple's Motion is premature. If the Court has any doubt concerning whether at least one of the defendants — [REDACTED] — will file one or more counterclaims [REDACTED], then the Court should deny Apple's Motion as premature or stay a decision on Apple's Motion until each of the defendants has answered the complaint.

1

Second, Apple does not allege that Lodsys is a party to the License or even an assignee of the License. Instead, Apple alleges only that "Lodsys purchased the patents in suit subject to Apple's License." See Apple Inc.'s [Proposed] Answer and Counterclaim [dkt. no. 27-2] at 1(3. If an entity is not a party to the contract, then by definition such an entity is a [REDACTED] In fact, "in the realm of contracts generally, the term 'third party' is commonly understood to mean a nonparty to the contract, that is, a person or entity that was not a party or signatory to the contract." Tribal Consortium, Inc. v. Pierson, No. CIV-06-238-D, 2009 WL 5194374, *9 (W.D. Okla. Dec. 28, 2009) (emphasis added).

Third, Apple bases its entire argument that Lodsys is not a [REDACTED] solely on the
assertion: "[REDACTED]." Reply at 1. But Apple does not identify what Lodsys is if not a [REDACTED]. Apple offers no authority for its bald assertion that [REDACTED]. And Apple offers no further explanation for its bizarre and unsupported assertion. Put simply, Apple's size and financial position as the most valuable company in the world does not provide grounds for Apple to ignore, change, or delete the plain and unambiguous terms of the License.

Fourth, if Apple is correct that [REDACTED], then accepting Apple's unsupported assertion would eviscerate the legal doctrine of third party beneficiaries. See, e.g., Rottlund Homes of New Jersey, Inc. v. Saul, Ewing, Remick & Saul, LLP., 243 F. Supp. 2d 145, 153 (D. Del. 2003) ("Under this doctrine, an individual who is not a party to a contract has standing to enforce the contract under certain circumstances.").

Fifth, Apple's unsupported assertion that Lodsys is not a [REDACTED] is belied by the fact that Apple filed the License under seal and then moved to maintain the License under seal for attorneys' eyes only, precluding even Lodsys from reviewing the License. See Apple Inc.'s Motion For Leave To File Under Seal [dkt. no. 5]. If Lodsys is not a [REDACTED] (as Apple now asserts), then Apple has no basis for precluding Lodsys from reviewing the License.

Finally, if the Court accepts Apple's unsupported assertion that Lodsys is something other

2

than a [REDACTED] (e.g., [REDACTED]), then Apple also cannot prevent Lodsys from enforcing the [REDACTED], which Apple does not dispute are triggered by participating in a [REDACTED]. In short, Apple and the developers are relying on a License that is most likely void.

2. The Defendants [REDACTED] the Validity of the Patents, and Lodsys's infringement claims [REDACTED] the Validity of the Patents.

Apple asserts that "[REDACTED]." Reply at 1-2. But again, as a threshold matter, Apple does not dispute (nor could it) that at least one (if not all) of the defendants [REDACTED] the validity of the patents. For example, a declaratory judgment counterclaim for invalidity would plainly be an [REDACTED] the validity of the patents. Accordingly, for that reason alone, Apple's Motion should be denied.2

Moreover, Apple ignores that [REDACTED]. Apple does not dispute (nor could it) that Lodsys's infringement claims against defendants [REDACTED] the validity of the patents. As discussed above, Apple cannot ignore (or delete) the plain and unambiguous terms of the License. See Marino v. Cross Country Bank, 2007 WL 1810485, *2 (D. Del. June 25, 2007).

3. Apple Fails to Satisfy Its Heavy Burden.

Apple asserts that, "[REDACTED]." Reply at 2. Apple, however, "disputes" two (and only two) terms of the License — i.e., "[REDACTED]" and "[REDACTED]." As discussed above, those two terms are unambiguous and Apple's unsupported assertions fail as a

______________________

2 [REDACTED]. See, e.g., In re Combustion Eng'g, Inc., 366 F. Supp. 2d 224, 231 (D. Del. 2005) ("the Court is guided by the principle that it should avoid interpreting contractual language in such a way as to render any term of the contract meaningless or superfluous").

3

matter of law. But even assuming arguendo that [REDACTED] is found to be ambiguous, Apple ignores that it "bears the burden of establishing its right to intervene." Adams v. Consol. Wood Products Employee Ben. Plan, 2:10-CV-310-TJW, 2011 WL 665821, *4 (E.D. Tex. Feb. 14, 2011.

Here, Apple has failed to provide the Court with copies of [REDACTED]. Tellingly, Apple does not dispute that [REDACTED] are triggered by participating in [REDACTED] the validity of the patents. The Court is not required to accept as true Apple's conclusory allegations that are contradicted by documents referenced in, but not attached to, Apple's Proposed Answer. See Associated Builders, Inc. v. Alabama Power Co., 505 F.2d 97, 100 (5th Cir. 1974). Accordingly, if [REDACTED] is found to be ambiguous, then Apple's Motion should be stayed pending discovery. At the very least, Apple should be required to provide this Court with the [REDACTED] before ruling on Apple's Motion.3

B. Apple Ignores the Infringement Claims and the Plain and Unambiguous Terms of Its Own Agreements with Developers.

Apple repeatedly asserts that supposedly "Lodsys does not contest that Apple's technology" lies at the "heart of this case." Reply at 1. But Apple ignores that the applications made, used, and sold by defendants (and not Apple) are "configured to elicit, from a user, information about the user's perception of the commodity.'" See Claim 1 of U.S. Patent No. 7,222,078. The defendants (and not Apple) make, use, and sell the configured applications to end-users. And the "commodity" is the application made, used, and sold by defendants, not Apple's technology. Accordingly, Apple's technology is not the "heart of the case."

Similarly, Apple's assertion that only it knows "how Apple's technology works" (see Reply at 5) is irrelevant, because the defendants obviously know how they make, sell, and use the infringing applications. And Apple ignores the presumption that its purported interest is adequately

Apple also asserts that supposedly its interests are more than economic. See Reply at 3. But then, hoping to avoid the plain and unambiguous terms of its agreements with developers, Apple focuses on the "exchange of payment" with developers. See Reply at 4. Apple also ignores that, in its opening Motion, Apple asserted that the "harm" absent intervention is Apple's inability "to preserve its substantial economic interest in its Developer relationships and sales." Motion at 11.

Moreover, Apple again asserts that its purported supplier-customer relationship with developers is sufficient. See Reply at 3-4. But Apple ignores the plain and unambiguous terms of its own agreements with developers that expressly disclaim any such relationship. See Huck Decl., Ex. 4 at ¶15.4. Apple also ignores that its agreements with developers expressly provide that the developers are "solely responsible for any and all claims and liabilities involving or relating to, the Licensed Applications." Id. at Schedule 1,¶1.3.4

C. Apple Ignores that Common Issues are Not Sufficient for Permissive Intervention.

Apple asserts that "Lodsys concedes that Apple's Motion raises many common issues of law and fact." Reply at 5. But Apple ignores that "[t]he existence of a common question of law or fact does not automatically entitle an applicant to intervene." Texas Educ. Agency, 138 F.R.D. at 507. Apple ignores that adequate representation by the defendants is sufficient to deny permissive intervention. See id. at 508. Apple ignores that the denial of permissive intervention is appropriate because Apple brings no new issues. See Ingebretsen on Behalf of Ingebretsen v. Jackson Pub. Sch. Dist., 88 F.3d 274, 281 (5th Cir. 1996). Apple also ignores that it cannot demonstrate an independent ground for jurisdiction because it did not acquire [REDACTED] under the plain and unambiguous terms of the License.

_____________________

4 Apple asserts "the Court cannot at this stage make a factual determination regarding disputed terms of a different contract outside the pleadings." Reply at 4. But the agreements with developers are not "outside" the pleadings, because Apple references and relies on those agreements. Apple also asserts that Lodsys "argues that Apple's interest is insufficient because there is no indemnification obligation here." Reply at 3. Not true. Lodsys simply noted that Apple does not have any indemnity obligations to the developers, which distinguishes Apple's purported interest from several of the cases relied on by Apple. Importantly, Apple does not dispute that it requires the developers to indemnify Apple.